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Getting Yourself Into the Gold Rush of App Stores

Dan Newman
August 15, 2013

During the California Gold Rush, those who supplied the miners with food, tools, and drinks made more money than the gold miners themselves. It's almost like the App Store gold rush: Those who provide developers with distribution platforms and services make more money than the developers themselves.

For every download of an application, developers can expect about $.10 to a little more than $0.01 in revenue. Meanwhile, these applications build the network effects that make the platforms enticing for consumers, and they also require database backends, ad networks, and other technical solutions to run and stay financially viable.

How can you put your money on the winning side of the rush to the mobile application market, and avoid fool's gold? Look to the suppliers, and not those panning in the digital river.

The obvious
The big players are clear: Apple (NASDAQ: AAPL), Google (NASDAQ: GOOG), and Microsoft (NASDAQ: MSFT). Apple popularized the application-store concept, and set the standard of taking a 30% cut of all application sales. In Apple's latest quarter, revenue from applications nearly doubled compared to last year. And throughout the life of Apple's App Store, developers have been paid $11 billion, with half of that happening in the last year.

According to Forbes, an Apple developer can expect $0.10 per download, versus $0.019 cents for Google's Play market, and $0.15 for Microsoft's Windows app store. And, while that makes it seem like developing for Microsoft is the best choice, the average Windows app is only downloaded about 4,000 times versus 40,000 for an Apple app, and 60,000 for a Google app. These are just averages, however, and a few select apps substantially outperform this, while others languish with very few downloads; similar to a few forty-niners finding gold nuggets while a majority found little to nothing.

Where to pan for application gold
There are less obvious plays for those who service mobile applications. Facebook (NASDAQ: FB), once derided for its failure to capture value from its growing mobile user base, has a small ace up its sleeve in a recent acqui